Special: 2021 China Tech Trends (with Tech Buzz China)

[0] Your format on TechBus China is, well, probably a similar amount of piles of research to acquired.

[1] Your format is way different.

[2] You actually write the whole thing out beforehand, right?

[3] Yeah, we actually do.

[4] We don't even record synchronistically at this point.

[5] That's the craziest thing.

[6] So, wait, can you explain what that means?

[7] We just record separately.

[8] I record my part and then Yangi records her part.

[9] It's more like an audiobook each episode, but sort of like two people reacting to each other who are not in real time in the same room.

[10] It's wild.

[11] Yeah, yeah.

[12] Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them.

[13] I'm Ben Gilbert, and I am the co -founder and managing director of Seattle -based Pioneer Square Labs and our venture fund, PSL Ventures.

[14] And I'm David Rosenthal, and I am an angel investor based in San Francisco.

[15] And we are your hosts.

[16] On today's show, we have a crossover episode, with Ray Ma and Yinglu from the TechBuzz China podcast.

[17] Ooh, so excited about this one.

[18] Been thinking about doing this for a while.

[19] I know.

[20] I've been listening to Ray and Ying for many years, listening many, many times over on repeat while doing research for Maytuan and PDD and Tencent and Alibaba and Jaomi and all of our China Tech episodes.

[21] They are the best English language China Tech podcast out there.

[22] and so excited to finally do this crossover.

[23] Yeah, no kidding.

[24] We wanted to cover a few things and thought that the best way to do sort of a broad, general China episode that's not specifically about a company would be to collaborate on one and do it together.

[25] So today we're going to talk about trends in 2021 for China Tech, how Ray and Ying do their research, given that they both live in the U .S., their views on the China Tech landscape and how those have evolved over the last decade as that ecosystem has rapidly developed, as we've covered on the show, and a little fun comparing and contrasting our two shows.

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[43] Now on to our conversation with TechBuzz China.

[44] All right, Ray and Ying, great to be doing an episode with you.

[45] Yeah, yeah.

[46] So totally.

[47] We're big fans of Acquired.

[48] Our goal is to be like the Acquired, but for, you know, China Tech.

[49] Oh my God.

[50] That's true, though.

[51] You guys agree.

[52] Well, why don't we turn it over to you real quick for, give us your personal backstories, a little bit about the show.

[53] Both of you live in California, right?

[54] Not actually in China?

[55] Yeah.

[56] We live both in the Bay Area right now.

[57] I was born in China, immigrated to the States as a kid when I was eight, and grew up primarily in Silicon Valley, actually.

[58] You know, went to school at Berkeley.

[59] And then when I graduated, went into investment banking.

[60] doing technology because I wasn't good enough to be an engineer.

[61] So study engineering college.

[62] And then went into finance.

[63] And in 2007, for personal reasons, moved to China and then ended up staying there for the next eight years, working in a variety of jobs, but starting first in real estate, investing, and then going into, even did some cross -border M &A, and then media, private equity and then finally really, really early stage startup investing at 500 startups, which is very, very early stage accelerator and seed fund.

[64] And then moved back to the Bay Area at the very end of 2015.

[65] Didn't think I was going to do much with China anymore, but was still keeping tabs on things.

[66] And I was like, hey, podcasts are all the rage.

[67] This is in 2017.

[68] Should do a podcast on China Tech.

[69] Seems like it could be fun.

[70] And then we'll very quickly.

[71] what I realized is that by the end of 2019, I would call it, I was like, well, some of these companies that I'm just sort of covering for fun and personal passion for tech buzz are actually really doing really, really well.

[72] And I should really think harder about whether or not I want to drop the China connection.

[73] And then so in 2020 decided to really pick it up full time.

[74] We took some investors to China with us in 2019.

[75] to visit a bunch of the companies that we talk about on the podcast.

[76] And then we were going to do that last year more, you know, as part of TechBus, but then the pandemic cut short all that.

[77] So we've pivoted into more of a community now online for investors.

[78] And then I personally do a bunch of consulting for funds interested in investing in China Tech.

[79] That's great.

[80] Well, it comes through on the show.

[81] Yeah.

[82] I can't talk about everything I get, you know, a lot of information is proprietary.

[83] But I try to to share what I can.

[84] There's so much that is happening that is reported if you are Chinese, but if you're American, you're like, I just occasionally get this random story about Jack Ma disappearing.

[85] Like, I would love to, I would love to understand thematically what's going on under those headlines in China.

[86] Yeah.

[87] And, you know, I think one thing I should point out when it comes to my personal experience, and also this happens to jive with King because we, that's what we met.

[88] we met when we're both living in Beijing, which is that we were there in retrospect at a very auspicious time in China Tech because prior to, let's call it, 2013, 14, China Tech was really, really small.

[89] So I was really there when the first couple years, really you could count on your hand the number of people doing angel investments in China, right?

[90] So there literally was a book called Angel Investors of China.

[91] I think it had like 12 men in it.

[92] So.

[93] Oh, my gosh.

[94] It's like the Warren Buffett used to go through, you know, the Moody's manual of companies to like look at all the companies that.

[95] There's like a manual of the.

[96] Here you go.

[97] Here are all the people.

[98] And then so I happened to then join 500, which at the time, by the way, a lot of people were like, why are you doing this?

[99] This is way too early.

[100] This is really bizarre.

[101] This is not a business model that works in China.

[102] And then it's not like I knew what policies were coming.

[103] But then two years later, boom, you have a couple thousand accelerators.

[104] You have hundreds of early stage funds and you have a total sea change shift in attitudes around entrepreneurship and startups where people went from thinking that was something honestly only losers did if they couldn't get a real job to now, oh, all the best and brightest would, of course, go and create their own startups.

[105] And that happened really around 2014 or so.

[106] And I think you can see it in the types of companies that are public today, right?

[107] some of the most popular companies that are always talked about in media, you know, Pindodua bike dance, Maytuan, et cetera, all these companies really started in the last decade.

[108] And Pindodua is a great example of a company that started in the last, you know, five, six years.

[109] This is when it all happened, basically, all the capital started flooding in and the social attitudes changed.

[110] Before the pandemic, both of us used to go back quite often, I would say probably quarterly.

[111] Now, because of the travel restrictions, then it is primarily online.

[112] But the good thing is that because of the pandemic, actually, everyone in China is also more used to being online.

[113] In fact, some of the VCGPs that I talk to, they themselves are not even based in China right now.

[114] They're like in Singapore or Taiwan or something.

[115] Very cool.

[116] All right, Ying, what's your story?

[117] So I think Ray brought me into the story when she mentioned that we met in China.

[118] it's been like 10 years ago when I went to China right after college and even when we started this podcast China wasn't a super hot topic in China tech even three years ago was not as appreciated and I feel like things have just totally changed and it's interesting to be able to say oh I've seen the rise of different sectors of tech especially like online to offline companies going overseas like the rise of all the digital live streaming and e -commerce happen in China while also watching concurrent trends in the U .S. But to go back, and I came to the U .S. when I was two from Guangxi.

[119] I'm actually a fourth -tier city, and a lot of my extended family that I'm very close with are still in fourth -tier and some third -tier cities, and they're all in Guangxi, except my parents and brother.

[120] So throughout my career, I've been more on the operator's side.

[121] I've worked with over, I would say over half, so over 50 percent, China -based, fully Chinese teams, like embedded as part of the team.

[122] I've been an employee.

[123] I've been a startup co -founder in China.

[124] This was like 2012 to 2014.

[125] I fell into this niche initially when I moved to the barrier from China in 2014.

[126] And that was the year that a lot of Chinese apps were trying to go overseas.

[127] You guys might know about this.

[128] And I'd be brought on to help them with their US business deals or set up an office or like do PR and tell their story.

[129] And today I have two partners in China.

[130] Most of my deep -rooted opinions and cultural schemas of China have been shaped by a combination of family background in early personal and professional experiences.

[131] But I do want to emphasize that we really have to put in time to gather current knowledge.

[132] So, you know, when people use the term like China expert or refer to tech buzz, I do think it's not something we just can spit off.

[133] It's just like you guys making an acquired episode and you have to put in a lot of time to do the research.

[134] Well, you could not have teed us up better to discussing what is happening now in China in terms of trends for entrepreneurship.

[135] So I'd sort of like to turn it back to you.

[136] Feel free to start wherever you want.

[137] But for both of our audiences, what are some trends that they should be paying attention to and that we'll be covering three to five years from now in the next Maytuan and the next Pinduoduo duo in future episodes?

[138] So actually, that's a great question.

[139] And at least in the near future, what we're focused on at our insider community, what I said for this year, what I think are going to be really interesting are a couple of things.

[140] One is consumer brands, and that's specifically on consumer brands being run like internet companies, which we can talk about.

[141] There's also community group buying, which is very disruptive, and it's a new form of e -commerce that's happening now in rural China that really kicked into high gear last year because of the pandemic.

[142] And then actually, the third thing, I will briefly mention it, but I don't actually have too much to share on the topic at the moment, which is if we think about China tech more broadly than just Internet or than even just software, then this whole new thing of electric vehicles and autonomous driving is really, really interesting in China as well.

[143] And actually, a lot of experts I talk to think that the U .S. and China are really kind of on par, or some people even think China's ahead in that sector.

[144] And that's definitely something I've I'm watching.

[145] I'm more familiar with the AV front and less with the actual vehicle making.

[146] But those are all interesting things.

[147] Well, maybe let's first start with that direct -to -consumer and that brand piece and kick it over to Ying.

[148] How do you think about that and what's going on in China there?

[149] So at a high level, I think we've always thought that, you know, in my observation, the level of quality of Chinese consumer brands, like Ray mentioned, is going to go up.

[150] And this is totally in parallel with innovation in China continuing, China no longer being a copycat, manufacturing and designing a lot of its own products.

[151] Ray, you mentioned consumer companies being run more like tech companies, but I'll delve more into specifically the DTC side, so direct to consumer brands.

[152] So I think there's a huge market opportunity for domestic Chinese brands to gain market share in China.

[153] And that's not just because, you know, again, the media narrative is all about like the youth being very nationalist, but actually it's because if you look at developed countries, right?

[154] So for example, the United States, we actually have something like a quarter of FMCG products, or foreign brands, our non -U

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